MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS'
MOTION FOR SANCTIONS AND AWARDING ATTORNEYS' FEES, COSTS,
AND EXPENSES

Honorable Bruce S. Jenkins Judge

On
November 15, 2017, the Court heard oral argument on
Defendants' Motion for Sanctions Pursuant to Fed.R.Civ.P.
11 and 28 U.S.C. § 1927 ("Motion") (DN 52).
Having considered the Motion, the Response of Plaintiff Sub
Zero Franchising, Inc. ("Sub Zero") (DN 53),
Defendants' Reply (DN 56), and the memoranda and exhibits
of the parties, as well as the arguments presented by
Defendants and by counsel for Sub Zero ("Kirton
McConkie") at the hearing, the Court ruled from the
bench granting the Motion. The Court directed counsel for
Defendants to prepare and submit a suggested form of order.
The Court also directed counsel for Defendants to file a
pleading as to the specific amount of attorneys' fees,
costs, and expenses sought.

On
November 29, 2017, counsel for Defendants submitted both a
suggested form of order and Defendants' Application for
Attorneys' Fees, Costs and Expenses
("Application") (DN 61). Kirton McConkie filed
oppositions to both submissions (DN 67, 69), to which
Defendants submitted a reply (DN 70).

An
evidentiary hearing was held on February 6, 2018 to consider
Defendants' Application. H. Dickson Burton, Robert
Theuerkauf, and Daniel Redding appeared on behalf of
Defendants. Richard Armstrong appeared on behalf of Kirton
McConkie. The matter was continued to February 9, 2018, where
H. Dickson Burton and Daniel Redding appeared on behalf of
Defendants and Richard Armstrong appeared on behalf of Kirton
McConkie.

Having
considered Defendants' Motion, Application, and
supplemental materials, the responses thereto, the evidence
presented, the arguments of counsel, the relevant law, and
being otherwise duly and sufficiently advised, IT IS HEREBY
ORDERED:

ii. Sanctions against Kirton McConkie shall be in the form of
Defendants' reasonable attorneys' fees, costs and
expenses incurred in this case, as outlined in the
Application and supplemental materials, in the total amount
of $361, 841.93.

BASIS
FOR SANCTIONS

The
Court finds the following conduct by Kirton McConkie did not
meet the standard of a reasonable, competent attorney, and
constituted violations of Rule 11:

Kirton
McConkie violated Rule 11(b)(3) when it signed the original
Complaint (DN 2) asserting a cause of action against
Defendants for infringement of U.S. Patent No. 8, 679, 566
("the '566 Patent"), including in alleging
without basis that Sub Zero was the owner of the right to
enforce the '566 Patent by assignment. This allegation
was without evidentiary support, and was not objectively
reasonable. The Court further finds that such allegation was
not based on a reasonable pre-suit investigation. Kirton
McConkie disregarded any reasonable inquiry into the
ownership or assignment of the '566 Patent, and asserted
this claim for infringement without any objectively
reasonable basis for the allegation that Sub Zero was the
owner of the right to enforce the '566 Patent by
assignment.

Kirton
McConkie violated Rule 11(b)(2) and Rule 11(b)(3) when it
signed the Amended Complaint (DN 17) asserting causes of
action for infringement of the '566 Patent and U.S.
Patent No. 7, 455, 868 ("the '866 Patent"),
including in alleging without basis that Sub Zero was the
owner of the right to enforce the '566 and '868
Patents by assignment. These allegations were without
evidentiary support, and, to the extent such allegations were
based upon the series of purported assignments (DN 52-5,
52-7) drafted by Kirton McConkie in March 2016, such
assignments were legally invalid and any allegations based on
such documents were not supported by existing law. The Court
further finds that such allegations were not based on a
reasonable pre-suit investigation into the evidence or into
the law.

Kirton
McConkie violated Rule 11(b)(3) and Rule 11(b)(1) when it
signed the Complaint and Amended Complaint asserting a cause
of action against Defendants for breach of contract. The
allegations related to such cause of action, including that
Defendants had received confidential and proprietary business
information, and trade secrets, of Sub Zero, and that
Defendants had used such information in the operation of
their store the Arctic Scoop, were without basis and were
without evidentiary support. The Court further finds that
such allegations were not based on a reasonable pre-suit
investigation, and that Kirton McConkie failed to conduct a
reasonable investigation into any information allegedly given
to Defendants by Sub Zero and/or its franchisees, as well as
into any information actually used by Defendants in the
operation of the Arctic Scoop.

Kirton
McConkie violated Rule 11(b)(2) and Rule 11(b)(3) when it
signed the Complaint and Amended Complaint asserting a cause
of action against Defendants for misappropriation of trade
secrets. The allegations related to such cause of action,
including that Defendants had received trade secrets of Sub
Zero, and that Defendants had used such trade secrets of Sub
Zero in the operation of the Arctic Scoop, were without basis
and were without evidentiary support. Further, any contention
that any information at issue constituted a trade secret was
not warranted by existing law. The Court further finds that
such allegations were not based on a reasonable pre-suit
investigation, and that Kirton McConkie failed to conduct a
reasonable ...

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